Correlation Between Curtiss Motorcycles and Thor Industries

Can any of the company-specific risk be diversified away by investing in both Curtiss Motorcycles and Thor Industries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Curtiss Motorcycles and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Curtiss Motorcycles and Thor Industries, you can compare the effects of market volatilities on Curtiss Motorcycles and Thor Industries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Curtiss Motorcycles with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Curtiss Motorcycles and Thor Industries.

Diversification Opportunities for Curtiss Motorcycles and Thor Industries

-0.24

Correlation Coefficient

Curtiss Motorcycles  Thor Industries

Very good diversification

The 3 months correlation between Curtiss and Thor is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Motorcycles and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Curtiss Motorcycles is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Curtiss Motorcycles are associated (or correlated) with Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of Curtiss Motorcycles i.e., Curtiss Motorcycles and Thor Industries go up and down completely randomly.

Pair Corralation between Curtiss Motorcycles and Thor Industries

Given the investment horizon of 90 days Curtiss Motorcycles is expected to generate 17.48 times more return on investment than Thor Industries. However, Curtiss Motorcycles is 17.48 times more volatile than Thor Industries. It trades about 0.13 of its potential returns per unit of risk. Thor Industries is currently generating about -0.13 per unit of risk. If you would invest  4.00  in Curtiss Motorcycles on September 16, 2024 and sell it today you would earn a total of  1.00  from holding Curtiss Motorcycles or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Curtiss Motorcycles  vs.  Thor Industries

Curtiss Motorcycles

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Motorcycles are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Curtiss Motorcycles unveiled solid returns over the last few months and may actually be approaching a breakup point.

Thor Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thor Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Thor Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Curtiss Motorcycles and Thor Industries

The main advantage of trading using opposite Curtiss Motorcycles and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curtiss Motorcycles position performs unexpectedly, Thor Industries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Thor Industries will offset losses from the drop in Thor Industries' long position.

The idea behind Curtiss Motorcycles and Thor Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.